As this industry has grown, the market has evolved, and customer acquisition costs have increased. Companies need to grow fast to get a piece of the pie, but this pressure can make it difficult to build a profitable DTC business.
When direct-to-consumer brands first started popping up a decade ago, it seemed like a great idea. The founders of Warby Parker, for instance, were fed up with the high prices and poor quality of glasses they found at traditional retailers. So they decided to do something about it: by cutting out the middleman, they could sell designer frames at affordable prices. Other companies followed suit: Allbirds made comfortable shoes that were stylish enough to wear in public without feeling self-conscious, while Glossier was all about making products that would help women feel good about themselves.
But now that these brands have been around for a while, it seems as though they're struggling to live up to their own hype. Warby Parker isn't doing so hot—it's reportedly losing $400 million in sales because its customers are defecting to cheaper options like Zenni Optical (which sells glasses for $8). And Allbirds' shoes—which cost $95 or more per pair—are being discounted by retailers including Nordstrom Rack and Lord & Taylor due to slow sales.
It's not just these two companies that are struggling; many DTC brands have seen similar declines in revenue over time due to increased competition from other online retailers, a lack of brand loyalty & higher customer acquisition cost. So, in what ways does the model need to change?
Distribution is a great way to widen your customer pool, while still building your brand identity on your site.
While Amazon is a great way to get your product into the hands of consumers, it's important to remember that it's not the only option out there. There are plenty of other distribution channels that can help you reach your customers, and they're just as important as Amazon.
So if you're looking to get your product on shelves in physical stores, here are some tips for how you can do it:
- Make sure that your product has a good fit with the store's brand image. It's important that your product will be well-received by customers in this space.
- Consider how much shelf space is available on different levels of the store. You want enough room so people can see what is available to purchase but also not so much that there are too many options crowding each other out from view.
- Think about how much money each store spends on advertising, and make sure that spending some of that money will help them get more exposure for their brand through your products being sold there!
2. Building a true cult brand (community)
Building a true cult brand (community) is key. Cult brands enjoy a level of brand loyalty other brands can only dream of. Their products sell out. People anxiously wait months – or even years – for the next product drop, and in between, their customers go online to share their brand adoration and recruit new evangelists.
And it’s not just about the product itself; it’s about the experience. A cult brand creates an environment where people feel like they are part of something special—like they are part of a club or community that shares their values and interests, and that they want to be a part of again and again as they grow older and change with each season.
What else makes up a cult brand? Well, there are many characteristics that have been identified time and time again as being common among cult brands:
- They have strong personalities who are not afraid to be themselves (and others)
- They have created a culture around their core values
- They have built relationships with their customers through community events, celebrity endorsements and content creation
3. Grow slow & think globally
There's a lot of pressure on brands today. Pressure from their investors, from their customers, and from the media. And so many brands are trying to grow as fast as they can—but that doesn't always work in their favor.
While it may be tempting to want to grow rapidly, there are also benefits to taking small but steady steps, especially for international brands. A brand that grows too quickly can find itself over its head in terms of staffing and managing all of its operations.
By taking things slowly, you can focus on making sure your product is right and your customers are happy before you try to expand into new countries or regions. If you're aiming at far-off goals like global domination or world domination (which we don't recommend), then you should still keep an eye on your local market while pursuing those goals—because that's where the majority of your revenue will come from anyway!
Want to learn more? Join the community
Subscribe to the weekly newsletter here
Feel free to share the article with your friends 🌟
Don't forget to check out Lanor :)
-Abiola Doherty, CTO & Co-founder, Lanor